RESEARCH

Does freezing a defined benefit pension plan increase company value?

In seeking to minimise pension risk, many companies have chosen to freeze or close defined benefit pension plan in the hope such an approach might give them time to adjust and increase corporate value. In a recent article published in the Financial Analysts Journal, Brendan McFarland, Gaobo Pang and Mark Warshawsky examine the impact of freezing or closing a defined benefit plan on the sponsoring companies’ market value.